April 15, 2015

Sugarcane Processing off to a Quick Start in Southern Brazil

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

Sugarcane processors in southern Brazil are getting off to a quick start in harvesting their 2015/16 sugarcane crop. The sugarcane harvest in southern Brazil kicks off officially on April 1st, but numerous mills had already started to process sugarcane during the second half of February and the first half of March.

According to the Union of Sugarcane Industries (Unica), 170 mills should be operating as of April 15th compared to 163 during the same time last year. By April 1st, approximately 5.4 million tons of sugarcane had been processed in southern Brazil, which is 44% more than April 1st of 2014. By the first of April, 153,000 tons of sugar had been produced in southern Brazil which is 11% more than during the same period in 2014. Ethanol production by the first of April reached 232 million liters or 57% more than last year.

The production of hydrous ethanol, which is sold as E110, increased 91% to 193 million liters by April 1st, while the production of anhydrous ethanol, which is blended with gasoline as E27, declined 16.5% to 39 million liters.

Conab is estimating that sugarcane production in southern Brazil, which produces 90% of Brazil's sugarcane, will increase 3% to 592 million tons due to improved yields compared to the drought impacted crop of 2014/15. Conab is expecting that the sugar production in southern Brazil will increase to 33.7 million tons compared to 32 million tons produced last year. It is expected that processors will devote more of the sugarcane this year to produce sugar because of the weaker Brazilian currency. When the currency is weak, it is more profitable to produce an export item such as sugar than the domestically consumed ethanol.